Skilled Workers - Too Few to Matter

[apsco17]

Since 1992, successive Governments have promoted a flood of immigrants under the claim that we needed them in order to boost our GDP and maintain our retirement programs. With these new immigrants, our economy would be more productive, tax collections would rise, subsidizing social spending, and our CPP, OAS and other programs would continue to be viable as the boomer cohort aged thanks to the flood of new, younger, immigrants.

It seemed to be a dubious claim to me since so much attention is given to refugees, family reunification and other non-economic immigration rationale. So, I went to the Gov't immigration site and looked up some statistics for 2008, the last year available.

First up - Total number of immigrants: 247, 243. This includes the skilled workers the Gov't claims we need and their spouses, children, family reunification and live in care givers.

Next, I added up the total number of economic immigrants addmitted: skilled workers – 43360, entrenepreneurs – 447, investors – 2831 and self employed – 164. Total economically productive immigrants: 46,802. In other words, of the 247,243 immigrants accepted in 2008, only 18.9% of them fit the “contribute economically to Canada's economy” rationale that is used to justify our massive immigration quotas over the last 20 years.

So, back to the concept of new immigrants sustaining our social programs and economy. For every economic immigrant, out of the gate their taxes have to carry four other immigrants' social programs and Gov't benefits. That doesn't leave a lot of payroll deductions left over for saving our CPP/OAS system. I admit that the spouses and children in many cases do contribute by getting their own jobs, but they're not the ones who have the skills that are in such high demand due to the shortage of trained workers. In other words, most of them only wind up competing with unemployed Canadians, artificially increasing our labour pool and permanently boosting the unemployment rate of native Canadians.

I have always been skeptical of the claims of economic benefits from mass immigration. This simple analysis suggests, without considering the costs of schools, waste disposal, traffic congestion, pollution and loss of farmland to expanding cities, that the 18.9% of immigrants who have skills that are in short supply can't pay enough taxes to carry the other immigrant arrivals, never mind subsidizing the benefits of existing Canadians.

Here's the link to the Gov't site with the stats tables:

http://www.cic.gc.ca/english/resources/statistics/facts2008/index.asp

I used the Permanent Residents by Category table, the second one down.

This back of the envelope calculation says to me that immigration is indeed an economic drain on our economy. It's time to challenge these "immigration is a net economic benefit" claims and debunk them.

What do you think?

[seujaime]

Dear Apsco
When it comes to immigrants, we really should look at the adults. How many of them are in the labor force or in university and how much are they earning? The figure should be compared with the corresponding figures for the native-born. For instance, how do adult immigrants who arrived between 1995 and 2005 compare to the native-born of the same age?
Unfortnately, if immigrants do as well as or better than the native-born, that doesn't prove that immigration was beneficial to the latter. Let's illustrate this. A tribe lives on berries. There are 100 working adults in the tribe and they pick on average 50 liters of berries a day. Now we add 25 working immigrants to the tribal population. After this immigration, the 125 workers pick 5750 liters of berries a day, yielding an average of 46 liters per worker. Let's assume that both the immigrants and the native-born have the same average. Then it can be said that the immigrants do as well as the native-born, but the native-born still suffer a decline of 8% in their production.
Such an outcome is by no means unlikely because large-scale immigration results in capital dilution. Since immigrants usually don't bring much physical capital with them, the result of immigration is less capital per worker. Since the productivity of labor depends to a large degree on the stock of physical capital available to them, immigration can have a productivity-lowering effect. Suppose that in this decade 10 million immigrants of working age will enter Canada. Let's assume that they have on average the same human capital as the native-born, then it still is very likely that by the end of this decade, labor productivity will be lower than it is now because of this capital-diluting effect.
Regards. Seujaime

[apsco17]

Seujaime,

To elaborate on your capital observation, only 2831 immigrants were investors ie: bringing capital in with them to Canada. Their investments have to capitalize about 245,000 other immigrants. It's unlikely that this tiny group can bring enough capital into the country to maintain the current average capital stock per person.

Proponents of immigration would say that immigrants are raising the human capital, not financial. But with only 18.9% of them actually hitting the ground working, they drag down the labour participation rate, not increase it. The working immigration % I calculated is the bulk of the working age immigrants since I excluded family class (likely older with no skills or they'd immigrate on their own) and spouses, children and refugees from the total productive immigration number.

All good arguments, but how can we get them into the mainstream? Canadians are not as enamored of immigration as the politicians think, but aren't irritated enough yet to let them know that.

[apsco17]

Here's a wide ranging article from the Sydney Morning Herald about the cost of excessive immigration in Australia. Some of the points echo the discussion in this thread.

The results of high population growth have been dead river systems, near-permanent water shortages, increasing pollution, a surge in imports and skyrocketing foreign debt, reduced per capita value of our mineral wealth and exports, expensive rebuilding of our cities and infrastructure, impoverished government budgets, loss of limited arable farmland to housing, traffic gridlock, crowding of our coastal towns and resorts, loss of native species and wildlife, urban congestion, local suburb planning conflict, loss of personal security and open spaces for our children to play, just to name a few. What is all this in aid of?

The great Australian dream has turned into a nightmare of haves and have-nots. If Australians knew that it would have led to all this, they would have turfed governments pushing high population growth out of office.

Our extreme population growth has put enormous pressure on hospitals, roads, schools and other essential services. The federal government is pouring hundreds of thousands of people into Australia every year and expecting these services to cope. Large skills shortages and stresses are the direct result. We then get governments and vested interest groups calling for — wait for it — more skilled immigration and even higher population growth. The dog never did catch its tail.

.....

Incentives to train unemployed Australians diminish when you can turn on the immigration tap. It's not as if we're short of people when we have well over a million unemployed and under-employed Australians, including 100,000 aged between 15 and 24 who dropped out of the labour market last year. High immigration acts as a disincentive to train and employ them, as it does with older and indigenous Australians. We would be better off giving our fellow Australians a hand up, rather than a hand out.

.....

Demographers have pointed out that we would need a massive influx of young immigrants to reduce the average age by even a small amount. What happens then, under this giant pyramid scheme, when this even bigger population ages? The house of cards falls down on the next generation. No wonder economists such as Ross Gittins and Richard Denniss have been scathing.

.....

Our GDP, or economic growth, has been outstripped and undermined by population growth. Per capita GDP has fallen for the past five quarters. How many successive quarters of negative growth do you need for a technical recession again? The $2 billion monthly trade deficits aren't helping. Our population growth is not having any significant impact on boosting our exports, but it is creating surging demand for imported TVs, cars, clothes and oil.

If you think that bigger is better, consider the fact that eight out of the top 10 per capita wealth nations have populations of less than 10 million. Also consider that Australia had virtually no foreign debt in the early 1970s, with a population of just over 10 million. Now, driven by large trade deficits and infrastructure borrowing, our foreign debt is fast approaching $1000 billion. That's $1 trillion.

http://www.smh.com.au/opinion/politics/how-many-is-too-many-australias-people-problem-20100218-ogfp.html

[apsco17]

The Center for Immigration Studies has a background paper on the costs of immigration. They offer a few conclusions that are relevant to this discussion.

* By increasing the supply of labor between 1980 and 2000, immigration reduced the average annual earnings of native-born men by an estimated $1,700 or roughly 4 percent.

* Among natives without a high school education, who roughly correspond to the poorest tenth of the workforce, the estimated impact was even larger, reducing their wages by 7.4 percent.

* The 10 million native-born workers without a high school degree face the most competition from immigrants, as do the eight million younger natives with only a high school education and 12 million younger college graduates.

*The reduction in earnings occurs regardless of whether the immigrants are legal or illegal, permanent or temporary. It is the presence of additional workers that reduces wages, not their legal status

http://www.cis.org/LaborSupply-ImmigrationEffectsNatives

This paper supports Seujaime's productivity argument - adding more workers without a corresponding increase in GDP and capital investment dilutes the capital base and GDP per worker. As I noted above, 81.1% of immigrants in 2008 were admitted solely on the basis of being related to a skilled immigrant. There was no requirement that they also meet skilled admission requirements. Therefore, I would assume that most of our immigrants would fall into the low skill / low education category where the negative effects on income are most dramatic for existing workers. While the statistics are from the US, the same effect should be expected here as well.

[apsco17]

Just found an article today which discusses the number of skilled immigrants who are actually working in jobs in their field.

Three quarters of foreign-educated professionals such as doctors, engineers and lawyers aren’t working in the career they trained for after arriving in Canada, according to a report released by Canada Statistics yesterday (Wednesday).

Only 24 per cent of immigrants educated in a regulated occupation outside Canada worked in their professions, according to data compiled from the 2006 census.

http://www.bclocalnews.com/fraser_valley/abbynews/news/85250342.html

So, only 24% of skilled immigrants actually worked in their chosen profession after arriving in Canada. The whole thrust of the immigration system is to bring in workers to fill shortages in critical areas. Yet, only 24% of 18.9% of the total immigrants to Canada in 2008 (4.5%!) actually met this criteria. The other 95.5%,or 236117, took work in other areas or didn't work at all. Since they weren't working in areas of skill shortages, they were competing with other Canadians and driving up the unemployment rate for Canadians. Returning immigration quotas to 40,000 instead of 250,000 would still allow us to bring in the 11,000 skilled professionals we got in 2008 without flooding the country in unneeded immigrants.

[realist]

As I noted above, 81.1% of immigrants in 2008 were admitted solely on the basis of being related to a skilled immigrant. There was no requirement that they also meet skilled admission requirements. Therefore, I would assume that most of our immigrants would fall into the low skill / low education category where the negative effects on income are most dramatic for existing workers. While the statistics are from the US, the same effect should be expected here as well.

Family sponsorship should be limited to spouse and dependent children of a skilled worker. There is no need to sponsor elderly parents, cousins, adult siblings, aunts, uncles, etc. By "skilled worker", I mean someone who is truly needed in Canada, for a specific industry that has a real skills shortage, not one that is fabricated by CEO's trying to lower salaries just because they "need" to buy a 4th home. I don't mean bringing in engineers during a recession when we have no engineering jobs for example.

[apsco17]

There's an oblique reference to the lack of marketable skills expected from immigrants in today's National Post. Though the discussion centers on the decrease in citizens who are active in charity and volunteerism, there is an unintended acknowledgement of the costs of unskilled immigration.

Canada will also continue to rely on significant immigration levels to maintain its population. Programs to assist with integration, settlement and language training -- delivered largely by communities and the non-profit sector -- are becoming more important in our social infrastructure. It is projected that the immigrant populations in Canada's major cities will increase by about 10% between 2001 and 2017. Mostly because of their countries of origin, fewer and fewer immigrants are arriving with a working knowledge of English or French. Data suggest that for the first five years after immigration, 19% of immigrants are persistently poor and almost 60% remain in low income categories.

Read more: http://www.nationalpost.com/opinion/sto ... zz0gynDoQ2

Call me cynical, but the primary justification for our current flood of immigration is to import skilled workers to help the economy grow. Yet, 60% of these skilled, critical to Canada's economy and economic growth, new immigrants are still in the low income category 5 years after arriving? Skilled labour makes more than the average wage, putting you in at least the average or above average income category. Instead, these immigrants are dragging the average wage down and increasing the poverty levels in Canada's major cities. Poverty breeds crime, poor academic performance, and reliance on social services paid for primarily by - drum roll please - Canadian taxpaying citizens.

So, in summary, our current immigration levels are adding 150,000 low income, low skilled immigrants to Canada each year, who require extra social services and expensive language training in order to function in Canada, but our policy of massive immigration quotas is supposed to increase economic activity and GDP by eliminating shortages in skilled labour in our economy. Does this make any sense to anyone with any sense?

[business-investment]

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[johnpenny]

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